Expected Socioeconomic-Status-Based Discrimination Reduces Price Sensitivity Among the Poor

Jorge Jacob, Yan Vieites, Rafael Goldszmidt, Eduardo B. Andrade

Journal of Marketing Research · 2022 · Volume 59 · Issue 6

Abstract

Low-socioeconomic-status (SES) consumers tend to be more price sensitive than their high-SES counterparts. Nonetheless, various economic-related burdens, such as mobility costs and lack of information, often hinder their ability to attend to scarcity—a phenomenon called “ghetto tax.” The current research moves a step further to show that even when very poor consumers can exert price sensitivity and are fully informed, a “psychological ghetto tax” often discourages them from doing so. Across five studies, the authors demonstrate that, relative to (1) high-SES consumers or (2) contexts of intra group interaction, low-SES consumers are willing to pay higher prices and to accept lower-value rewards to avoid commercial settings that require inter group interaction (e.g., poor consumers in a high-end shopping mall). This effect is driven by the poor consumers’ heightened expectations of discrimination in upscale commercial settings, a concern virtually nonexistent among wealthy consumers. Companies’ inclusion statements emphasizing customer equality and/or customer diversity can serve as safety cues against stigmatized identities and increase low-SES consumers’ price sensitivity.

Keywords

price sensitivity, socioeconomic status, poverty, discrimination, stigma, stereotype threat

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